The ordinal egalitarian bargaining solution for finite choice sets

John P. Conley, Simon Wilkie

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3 Citations (Scopus)

Abstract

Rubinstein et al. (Econometrica 60:1171-1186, 1992) introduced the Ordinal Nash Bargaining Solution. They prove that Pareto optimality, ordinal invariance, ordinal symmetry, and IIA characterize this solution. A feature of their work is that attention is restricted to a domain of social choice problems with an infinite set of basic allocations. We introduce an alternative approach to solving finite social choice problems using a new notion called the Ordinal Egalitarian (OE) bargaining solution. This suggests the middle ranked allocation (or a lottery over the two middle ranked allocations) of the Pareto set as an outcome. We show that the OE solution is characterized by weak credible optimality, ordinal symmetry and independence of redundant alternatives. We conclude by arguing that what allows us to make progress on this problem is that with finite choice sets, the counting metric is a natural and fully ordinal way to measure gains and losses to agents seeking to solve bargaining problems.

Original languageEnglish
Pages (from-to)23-42
Number of pages20
JournalSocial Choice and Welfare
Volume38
Issue number1
DOIs
Publication statusPublished - Jan 2012
Externally publishedYes

Keywords

  • bargaining solution
  • certainty equivalent
  • bargaining problem
  • Nash Bargaining School
  • compound lottery

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